TLDR; Embrace your wealth-generation journey, making the rent vs. buy decision based on your own terms and goals. Your path to prosperity is unique—own it, and let your choices reflect your aspirations.
The signal-to-noise problem with real-estate
This may surprise you when I say I’m a big fan of procrastination; or as I like to say, I am pro-crastination. Why? Because sometimes we need to pump the brakes on important decisions.
In fact this latest article was the perfect example of me procrastinating so I could gain clarity around its most important message. Why? There are so many pundits on both sides of the rent vs buy discussion. It’s been exhausting weighing the pros and cons and I can’t imagine what it must be like “needing” to purchase a home now.
Thankfully, I discovered two super-powerful tools to bring levity to the choosing renting vs buying. Let’s dive in and enjoy some clarity inside the conversation.
You do you
I am just going to give you the pearls of wisdom from this article right here and now. It’s much easier this way and takes less time.
#1 Mind your own business – First and foremost, do what the heck you want! (Act with integrity and good intentions, or course) If you want to own where you live. Do it! Ignore the pundits who say otherwise.
Remember the old saying; “Mind your own business!” It’s interesting because so many forget the message is intended to be reciprocal. You mind yours, and I’ll mind mine.
Today, you can’t turn on the television, social media, go outside or talk to friends & family without someone wanting to “help” you make the right decisions. The buying vs renting decision is yours to make. There isn’t a wrong answer, there is simply the best choice you can make right now, based on what your needs, are and what you want. Which brings me to my second guiding principle…
#2 Own your decisions – STOP trying to figure out the “right” decision!! Instead, make the decision “right”. If you want to rent long term, then make this the right choice and build your overall wealth generation strategy around renting, or vice versus.
You cannot simultaneously rent and own, so pick one and make it the best decision possible right now. When your situation changes, then make a new decision right.
That’s it. If you just read this section and take the rest of the day to feel thanks and gratitude for your position in life (both the easy and hard stuff), you’ll have the necessary tools to amass more wealth and prosperity than most. Period. Stop. You’re welcome.
Making renting your home an easier decision
I suspected some of you might want to stay here, still curious about what or how to proceed. I get it. It’s okay.
There’s no judgment because I actually empathize with how freakin hard it can be to get what you want in life. So if you’re wrestling with personal judgment on not being able to afford to buy, please allow me to empathize.
- Housing is expensive here in the Front Range – It is! Having moved here three times, I cannot ever remember it being cheap. Psychologically, this can make it even harder to take on a mortgage; especially, as a first-time home buyer.
- Renting costs less – Run the numbers on just about any rent vs own calculator in today’s market and the calculations usually favor renting. Especially if you’re investing the incremental costs of owning into a retirement or other investments. (Check out the NYT rent vs buy calculator link at the end of the article)
- My housing is all over the map – This is especially relevant if you’re not sure where you’ll be living in 10 years, or prefer the mobility of renting.
- Renting is no big deal – In other parts of the world, renting is more common and considered normal. Here in the US, this is still not particularly desired long term. You can blame marketing.
- Down payment fatigue is real – Saving up money for a downpayment can feel insurmountable at times. Not to mention, the salary/income required to qualify. Why even try? I get it.
Sensible renting scenario
Do I see a time in my future where renting would actually make sense, or be even necessary? Absolutely.
I often hear of wealthy individuals who rent, despite having large net worths. In fact, here’s a great story of one such individual promoting the benefits of renting vs owning.
The short answer for me is that owning real estate affords me superior wealth creation opportunities while I am in wealth-generation mode. Eventually, my focus will shift more towards wealth preservation; in which case, renting may likely become a better alternative to preserving passive income.
Don’t kid yourself. Many of us will end up in assisted living at some point; which is just really assisted renting. I would even go so far as to suggest that before you die, you stand a good chance of renting, regardless.
6 more reasons to pursue home ownership
However, if right now owning is your top priority, and you’re feeling disuaded at times, Here are six of my most encouraging reasons to continue to own, or pursue owning where you live.
- Hedging against rising housing costs – When you buy vs rent, you essentially are hedging your future housing costs from the effects of appreciation and inflation. Ever heard someone say; “I couldn’t afford to live in my house if I had to buy it today?” It seems that pundits of renting vs housing seem to rarely emphasize the significance of locking in your housing costs.
- Ride the appreciation wave – Might it cost more to own initially versus renting? Probably so, especially in the current market. However, over time as rents increase your housing costs decrease relative to current housing rents. The sooner appreciation starts working for you, versus against, you immediately begin to create a buffer against rising real estate costs
- Nothing left to save – Saving money is hard for many folks; especially, when we’re younger and have less disposable income. Pro renters pontificate on the opportunity costs of buying vs renting; lamenting the potential wealth generated by delaying home ownership and investing in other assets (i.e. stocks, bonds, mutual funds, etc.). My question is; “Where exactly is this disposable income they’re supposed to invest coming from?” It rarely exist so there’s no money to invest.
- You have to live somewhere – If you’re going to be paying to live someplace, why not at least get some incremental savings and wealth generation from the situation. In this regard, buying a home becomes akin to saving money; even if it’s just a little in the beginning.
- Renting sucks, mostly! – Here’s another reality most pro-renting pundits gloss over. From a living experience, renting often comes with cheap finishes, an excess of shared space and impersonal service, at least in my experience. Most who desire home ownership desire a higher quality of life and environments that better align with their aspirations.
- Shite happens – Finally, it’s worth noting that you could be earning less from your job even 10 years from now than expected as salaries tend to flatten off as you get older.
Wedging yourself into real estate
I won’t dive deep into the opportunities to leverage programs and strategies to build up you down payment. However, aside from minimizing your monthly cost of living and building your credit score up to 780, here’s a list of THE most powerful tools and strategies to wedge yourself into owning vs renting:
- FHA Loans which target folks with lower credit scores and limited down payment options.
- Down-payment assistance programs – there are many out there. Ask your preferred lender.
- Conventional mortgage insurance for 3%-19.99% down payments options so you can afford more house now.
- Focusing on what I like to call B & C areas which border your desired A location. This can have multiple benefits including:
- Jumping on the appreciation bandwagon building equity sooner.
- Eventually, those options on the outskirts could become A locations.
- Having the option to rent the property down the road as your ability to move closer to your target area improves.
- Selling your property in a few years to help fund your next home’s down payment. Remember, $250k-$500k of profit from the sale of your primary residence is tax free depending on how your file your taxes.
Final Thoughts
One of the greatest saboteurs to our success is that when a goal feels overwhelming, we tend to seek other lesser goals that ultimately only serve to delay reaching the thing(s) we REALLY want in life.
This can become a vicious circle; all the while, housing costs continue to rise. You have to decide what’s more important to accomplish first, and then take action.
In which case, consider turning off the pundits and focusing on minding your own business; knowing the decision you make is the best decision for you!
If you’re getting close to being prepared when your dream home or investment property hits Zillow, the next best step you can take now is getting pre qualified by an expert mortgage broker. It’s complementary and won’t impact your credit score, but it will improve your ability to take action when the right property comes on the market.
Until next time.
All my best,
Bryan
Resources
- IRS Sale of Your Home – https://www.irs.gov/taxtopics/tc701
- New York Times Rent vs Buy Calculator – https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
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Bryan Kreitz
Mortgage Loan Originator NMLS 2267669
Bryan Kreitz, a seasoned mortgage consultant and the driving force behind Highlands Ranch Mortgage, brings an extensive background in real-estate financing and personalized lending solutions.
His expertise spans traditional and innovative loan options for a diverse clientele, including self-employed individuals and real-estate investors. Bryan’s dedication to client success in the mortgage industry is supported by his professional achievements and commitment to personalized service.
For the most accurate and detailed information about Bryan Kreitz’s professional background and expertise, visiting his LinkedIn profile and his About Highlands Ranch Mortgage page is recommended
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